Taking on global challenges14 December 2016
Textile care companies face similar challenges globally, as delegates from 12 different countries learned in Bruges last October. Kathy Bowry reports on two of the panel presentations in the first part of our WTSC coverage
The World Textile Services Congress in Bruges brought together the movers and shakers of the textile care industries across the globe. The congress, organised by FBT, ETSA and TRSA, looked at the challenges faced by today’s industry and fielded an impressive array of presenters who pulled no punches as they addressed delegates.
Global trends overview
Willemijn Martens, the procurement director for Accor Hotels, Benelux, is also one of the founding partners of BUYOLOGIE Procurement Management, a company that specialises in finding ways to save on non-strategic expenses for SMEs. She addressed the linen rental versus linen purchase and OPL dilemma hotels from the operators point of view.
“Linen is inextricably linked with a bed. And the bed is the most important element for anyone who spends the night in a hotel. But there is also bad news. Hotels are buying their own linens again. This is mainly the case for towels, a little less for sheets. They are opting for the system of two cost centres: the initial investment in linens on the one and textile care on the other. And for the latter they buy their own machines and detergents, as well as relying on their own personnel,” she says.
She said the smaller, non-listed hotel groups that are entering the market, play a more substantial role in this trend, which is not a global trend just yet. “They have not had any bad experiences when it comes to owning and managing their own linens. They only see the benefits, thinking they can order new linens when they feel like it, never have to worry about delivery errors and can also choose the quality of the textile care themselves.”
Charlie Betteridge, vice president global corporate accounts at Christeyns commented that Martens is representative of a new generation of buyers, who emerged after the crisis of 2008. “They are no longer interested in long-term relationships, strategic decisions and the bigger picture, including service, in fact, the best price agreement. All they want is the lowest price because they know that the supplier will always give in, especially in case of overcapacity. The only uncertainty is how low is the supplier prepared to go? So the question arises whether quality still has a price. If profit is the difference between turnover and costs, what will happen to the quality of textile care if you generate less turnover. Either you start to do your work badly or you anticipate by reducing the costs (of water, energy, detergents and so on) yourself.”
However, he added, many of the innovations that are introduced in textile services are developed to save money and cut costs. “If you do not innovate, you will never be able to keep up with your competitors when it comes to offering lower prices.”
Jesper Munch Jensen, CEO of the Jensen Group is convinced that textile care companies need to look beyond the obvious, stating: “Globalisation created an economy in which everyone offers similar products. In the developing countries this often leads to copycat behaviour. So the idea is to identify tomorrow’s needs. Why do you buy an Apple smartphone? Because the company with the apple logo managed to make us believe that we needed something that we did not even knew existed. The same goes for car maker Tesla pulling something off in a very short time frame that usually takes 30 to 40 years to achieve. If everything looks the same, this has an impact on pricing. You can only break through this circle by offering something completely new. Your survival depends on your ability to innovate, to be a game changer. And this also applies to textile services.”
Sam de Boo, vice president & general manager textile care, Ecolab Europe, addressed safety in the workplace. “Every year, 1.1 million people die due to an accident at work. This is more than the number of war and traffic casualties combined. Every job involves risks for an employee. And things are no different in a laundry: The manual handling of roller containers, operating machinery, hazardous chemicals, driving vans and lorries.. Every year, our industry records tens of thousands of work-related injuries worldwide. All these accidents also have an impact on the company, resulting in less productivity, less motivated employees and higher insurance premiums. Even though most calamities could have been avoided. You cannot create a safe working environment by accident. That is why ETSA has appointed a new committee that will study this in more detail. You can make a lot of headway by educating employees, with audits, good communication and a sense of responsibility.”
Martin Kannegiesser, owner and CEO of Herbert Kannegiesser previously served as president of the German employers’ federation. His message to the congress was that labour relations influence politics, freedom and the values of a society. “That is why entrepreneurs have an important role to play. Human resources are one of the biggest cost centres in the textile industry, but they are also instrumental in a company’s success.
“You can achieve high productivity and a consistent workflow among others by flexible working hours, incentive programmes and healthy work stations. But political decision-makers have to create the right framework for this, facilitating investments. Private initiatives must also be taken in the second pension pillar and lifelong learning should be an evidence. The need for more teamwork does not imply that there no longer is a need for leadership,” he concluded.
Textile services market dynamics
How do the concentrations of companies, demographic conditions and the economic mix or even the cost of deliveries impact in different countries and continents. It seems we all face the similar concerns as we heard from the different trade associations’ representatives and entrpreneurs
David Pottack, senior vice president, sales and marketing at Unitex Textile is also president of the TRSA. “Currently, the textile services industry in the United States accounts for an annual turnover of about US$19.2 billion. In this framework, it is worth remembering that the larger companies mainly focus on workwear. However, the market’s potential amounts to US$ 28 billion. The greatest opportunities are in hygiene products for washrooms and direct sales. Their share has the potential to significantly increase and will do this in the long term. Other facilities that come to mind are safety facilities, such as first aid kits. The industry has already been working on more diversification for quite some time. The share of workwear is reducing by the day and currently amounts to just 50%. The share of barrier mats is also declining while hygiene products are performing very well. A survey conducted in 2015 showed that managers in the industry mainly expect bath and bed linens to perform really well in the future.” As in Europe and the UK, there is more consolidation, both among the providers of textile services and on the customer side. More and more jobs are automated to reduce personnel costs. And because to measure is to know, all costs are continually monitored. Certification is becoming increasingly important every day. Customers want to be able to recognise quality.”
The European counterpart of Potack – Juha Laurio, CEO of the Lindström Group and the president of the ETSA, the leading European textile services federation told delegates: “Figures from 2012 indicate that the European market accounts for a turnover of €11 billion. Currently, however, there is a potential of €26 billion. And real positive minds have even hazarded a guess of €46 billion. But all this relies on optimum performance. Romania, for example, on average spends half a euro per capita per year on textile services. Compare this to the European average, which is €24.7.
“The best in class is Finland, with more than €60 euros. Is this possibly due to the fact that they still cover their beds with reindeer hides and tend to wear a fur coat rather than a T-shirt?” As far as the outsourcing of textile services is concerned, in 35% of all cases companies rely on textile care specialists for their flat linens. For workwear, the percentage is about 30%. Cleanroom products are outsourced more often (65%). Customers tend not to turn to textile services companies so easily for sanitary applications and barrier mats In terms of trends, said the ETSA president, our emphasis will have to shift from our laundry processes to our customers.
Chris Sander, CEO of the Johnson Service Group and president of the British Textile Services Association said: “The UK is perceived as a world leader. But in effect it only has a population of 64 million and its surface area is actually smaller than that of the American state of Oregon. The textile rental sector accounts for an annual turnover of £1.6 billion pounds. The hospitality industry takes the largest share (£600 million), followed by washroom products. Workwear and healthcare are about the same. Every week, 100 or so companies take care of about 25 million items. Four thousand lorries return them to the customers. The industry has a workforce of about 25,000 people and spends 250 million pounds annually on the purchase of new textiles.
“One of the main challenges our British colleagues face is wage cost. The government has instituted a programme which requires wages to be increased. Trainees will also become more expensive in 2017. It is impossible to pass on this additional cost to customers. It is also becoming increasingly difficult to find suitable staff while growth continues to be the industry’s ambition.
Mia Decaestecker, CEO of Malysse-Sterima, represented the host country on this panel. She started by reminding the audience of the fact that Belgium spends 10.9% of its GDP on healthcare. “This is well above the European average but significantly less than in the USA. Most hospitals are government-owned and many of them are in debt. So they must find ways of reducing costs.
“On the other hand, in the long run, some hospitals will have to close and the remaining hospitals will have to work more closely together. As a result, textile service companies will sign fewer contracts, but they will be bigger. Hospitals will centralise their procurement, resulting in more standardised products and volume effects on pricing.
“Another obstacle is the Act of 2013, requiring public hospitals to organise tenders for their procurement. Procurement is subject to a lot of rules as a result.
“Now that robotics and digitisation are standard practices in the healthcare industry, the textile services industry will have to follow suit, with technology becoming increasingly important.”
After the conference, delegate Phillip Wright from the UK’s TSA told LCNi: “There are clearly common challenges around the world in terms of environment and regulation but it also illustrated to me there are some differences in terms of market approach – the UK seems to be a particular price oriented market rather than service value. But there are many areas where the trade associations from around the world can learn from each other and work proactively together. After a number of very interesting discussions with colleagues, I am following up a number of areas in the coming months.
“It is also clear that many companies are innovating and looking to develop their business through investment – I think this will become increasingly important.”